EVALUATION IS DEFINED AS THE DEVELOPMENT OF INFORMATION RELATING TO TREATMENT PROGRAMS THAT IS USEFUL FOR POLICY DECISIONS. A METHODOLOGY FOR THE EVALUATION OF COMMUNITY MENTAL HEALTH SERVICES IS PRESENTED THAT MEETS STANDARDS ENCOMPASSED BY THIS DEFINITION FOR THE SITUATION WHERE BUDGETARY AND STAFFING RESOURCES ARE LIMITED. UNDERLYING EVALUATION ISSUES AND PROBLEMS CONCERN THE COMMITMENT TO UNDERTAKE EVALUATION, THE AVAILABILITY OF RECORDS, CONTINUITY OF CARE, STAFF RESISTANCE, CONTINUOUS VERSUS EPISODIC MONITORING, AND THE SELECTION OF AREAS TO BE EVALUATED. WITH REGARD TO STRATEGIES THAT CAN BE EMPLOYED SUCCESSFULLY IN EVALUATION, ATTENTION IS FOCUSED ON SERVICE AREAS IN THE FIELD OF COMMUNITY MENTAL HEALTH THAT RELATE TO THE PROBLEMS OF CLIENT UTILIZATION, PROGRESS, AND OUTCOME. THE EVALUATION OF DIRECT SERVICES INVOLVES SOURCES OF REFERRAL AND DISPOSITION, AN ANALYSIS OF SERVICES DELIVERED, AN ANALYSIS OF HOSPITALIZATION DATA, AND FOLLOWUP. THE EVALUATION OF INDIRECT SERVICES INVOLVES TELEPHONE REQUESTS FOR INFORMATION, THERAPEUTIC TELEPHONE CONTACTS, AND COMMUNITY CONSULTATION CONTACTS. COST ANALYSES REPRESENT AN ATTEMPT TO ASCERTAIN THE IMPACT OF EVALUATION ON STAFF, ADMINISTRATION, LEGISLATURES AND OTHER FUNDING SOURCES, AND THE COMMUNITY. THE IMPLEMENTATION OF EFFECTIVE EVALUATION STRATEGIES, EVEN IN THE ABSENCE OF ADEQUATE BUDGETARY AND STAFFING SUPPORT, IS CRITICAL TO THE MATURATION OF THE COMMUNITY MENTAL HEALTH SERVICE SYSTEM CONCEPT. REFERENCES ARE INCLUDED.